KUALA LUMPUR, Oct 3 — The Malaysian government has made significant progress in digitising its operations and services, but persistent gaps in cross-ministerial engagement, digital skills and resistance to change continue to limit its potential to translate them into productivity gains, the World Bank said in its latest economic monitor report released today.
A key problem highlighted early in the report was the inability to hire skilled workers adept in digital technology. The Bank said recruiting and retaining digitally skilled staff remains a major challenge, with high turnover particularly among specialists.
Nearly half of respondents across ministries reported difficulties in hiring staff with the necessary digital competencies, with the problem most acute in the Ministry of Digital, at 64 per cent, and the Ministry of Economy, at 54 per cent.
“Importantly, the barriers lie less in salary competition with the private sector than in internal factors — such as outdated systems, unclear career pathways, and uncertainty about required skills — which together make it harder to attract and retain talent,” the authors of the report said.
“Moreover, resistance among managers in some cases, siloed planning, and limited inclusion of collaboration and feedback in strategic planning risk undermining the whole-of-government approach to public sector digital transformation,” it added.
Near-full digitised services
The federal government’s digitisation push started under then prime minister Datuk Seri Najib Razak, and was continued by subsequent administrations in efforts to improve efficiency, services and speed up bureaucratic processes that could influence investment decisions.
The World Bank said institutional enablers of digital transformation have been strengthened over recent years, and a critical milestone had been achieved with the creation of the Ministry of Digital in 2023.
The ministry’s formation helped consolidate leadership of the digital agenda, while the restructuring of MAMPU into Jabatan Digital Negara (JDN) provided a dedicated institution for GovTech, it said.
GovTech refers to the use of technology and digital innovation to create simpler, more transparent and efficient government services for citizens.
“Moreover, high-level coordination platforms, including the Modernisation and MyDIGITAL Government Cluster Committee chaired by the Chief Secretary to the Government and the National Digital Economy and 4IR Council chaired by Prime Minister Datuk Seri Anwar Ibrahim, provide venues for cross-government dialogue,” the authors of the report noted.
Malaysia’s public digital service delivery has developed significantly, with nearly three-quarters of all public services digitised, the World Bank said. At the federal level, coverage is already close to 90 per cent.
Fragmented services, uneven digitisation
Still, these services remain fragmented, with uneven adoption across ministries and government agencies, it noted. Limited citizen engagement has also hindered tangible benefits for users.
At the state level, adoption of digital services, particularly in Sabah and Sarawak, lags behind, with only 59 per cent of services digitised compared to 89 per cent at the federal level.
Smaller firms also face barriers: while over 90 per cent of large companies file and pay taxes electronically, uptake drops on average to 81 per cent among SMEs and varies across states, with one in four firms in Sabah and Sarawak still not using e-filing or e-payment, according to World Bank Enterprise Surveys released in 2024.
“Many core systems continue to operate in silos, with limited interoperability and transparency compared to OECD benchmarks,” the authors noted, adding that citizens are not engaged in the design of services, and platforms often lack feedback loops or published user satisfaction metrics.
“Without stronger integration, inclusiveness, and user-centred design, Malaysia risks achieving digitalisation without transformation and impact — delivering more online services but not necessarily more trusted, efficient, or equitable services,” the report said.
The real test of its digital reform success lies in consistent implementation, the Bank said, even as Malaysia has made notable progress in infrastructure, reform and service expansion.
“Embedding collaboration, accountability, and citizen-centricity will be critical to ensure digital transformation delivers measurable gains in productivity, service quality, and trust,” it said.
